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TymeBank tiptoes into lending

After Covid-19 scuppers plan to launch unsecured loans.
Using MoreTyme is a bit like buying goods on 'lay by', but being able to take the purchases immediately. Image: Moneyweb

TymeBank, the bank owned by African Rainbow Capital (ARC), has launched its first credit product, MoreTyme. The bank says the product offers “interest-free shopping”, with customers paying half the price at the till point of partner retailers and the rest in two equal instalments over two months. This is not dissimilar to services such as Mobicred and Payflex, which offer instalment-based shopping, but for e-commerce merchants only.

The Covid-19 pandemic and associated lockdowns put paid to TymeBank’s original plan to launch a standard unsecured lending product to customers in 2020. It had piloted this before the hard lockdown started.

In June, ARC Investments told the market that “management is exercising significant caution in the context of a challenging economic environment” when it comes to its “credit business, and specifically its unsecured lending proposition to customers”. It added the “bank is considering alternative credit products which do not carry the same longer-term risk as an unsecured term loan”.

In December it said it was “planning to enter the market with innovative lending products in the first half of 2021”.

MoreTyme

TymeBank has launched MoreTyme with two partners, Pick n Pay and NWJ. The bank offers an example of a purchase valued at R4 000. A customer will create a MoreTyme payment voucher in their banking app, which will settle the full amount due at the till. An amount of R2 000 comes off their account immediately. Two further payments of R1 000 are then debited from their account at 30 days and 60 days after purchase.

The amount available to spend under MoreTyme is dynamic, and the overall limit is approximately twice the current balance in one’s EveryDay account. Frequent usage, saving via Goalsave and moving their salary to a TymeBank account will generally increase the customer’s limit. They are able to have more than one active purchase at a time, as long as their overall limit is not exceeded.

TymeBank will make money from late/missed payments.

It charges a fee of R65 for any late payment, and says the “purchase will then become an incidental credit agreement”.

In the terms and conditions for its products, it says interest will be charged at 2% per month on the amount in arrears.

The bank also has the right to deduct the amount due the next time any funds, including salary, are paid into the account of a customer in arrears.

In some ways, this mechanic of paying instalments is similar to buying on ‘lay by’, but it differs in that customers are able to take their purchases with them immediately. Educating the market about how this actually works will be a challenge, but it is similar to very popular airtime advance products offered by most of the major mobile operators.

The plan was always for TymeBank to move beyond earning income from just transactional fees. Interest income will be a growing contributor to the bank’s revenue as it launches credit products. It sees insurance as part of this mix as well.

ARC Investments said in December, the bank had “concluded one bancassurance partnership and is in the process of piloting a second bancassurance partnership which will enable TymeBank to provide a broader suite of products to its clients”.

It currently offers funeral cover via a Family Protect policy underwritten by Hollard. Leveraging its relationship with Pick n Pay, TymeBank offers a grocery benefit as part of the policy, which is determined by the average spend at the retailer in the preceding three months.

By the end of November, TymeBank had 2.5 million clients, of which “approximately 1.5 million were actively using their accounts”.

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Lone sharks like ARC will run unsecured lending and secured lending will migrate to DeFi “crypto”.

Why EVER would you use a bank again???

Crypto is not going to borrow you money or are they? (Unless if I am behind the times)

This share is just as a non performer as Standard bank.

Should I dump them? is there any future in them?

You can get a loan right now for 66% of your collateral without filling in a form or anything. Very low interest rate and you pay back whenever you want. Does not have to be monthly can even be in a few years time!! So your crypto goes in a “vault” and you get your loan that can be converted to Fiat currency..Quick quick no hassles.

That’s available right now!!! That’s DeFi Decentralized Finance.

Yes you can. The risk on DeFi lies in the value of the security as collateral. Do you believe your collateral will stay constant or increase in price for the term of your loan?

It’s like margin/asset lending, just with Crypto instead of shares or physical assets. It just depends on your view on valuations and the term of the loan. If your LTV gets messed up due to the value of the security dropping then your loan gets liquidated or you top up. But the interest rates are great.

Safest probably to go for DAI or something stable? 1:1 with USD. Inflation hedge at least. Over a long period inflation might repay your loan.

” … R65 for any late payment,2% per month on the amount in arrears.” This is where the money is from locked-in clients.

And if 1.5m are in credit, it gives P&P a nice balance to invest.

End of comments.

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